Chandigarh, July 30
Punjab Tractors Limited (PTL) has finally been merged with Mahindra & Mahindra (M&M), after the board of directors of both companies approved the amalgamation scheme in Mumbai today.

All assets and liabilities of PTL will be transferred to M&M. The appointed date under the scheme is August 1, 2008.

Upon the scheme becoming effective, M&M will transfer all equity shares held by it in PTL to a Trust, of which M&M is a beneficiary.

The latter will issue its shares to PTL shareholders on a record date, based on the swap ratio of 1:3 (one equity share of Rs 10 each of M&M for every three equity shares of Rs 10 each of PTL).

“The valuation of the companies has been done by Ernst and Young and N.M Raiji and Co. on the basis of the market share price, net asset value and earnings per share,” said Anjani Choudhari, chairman of PTL and president of farm equipment sector of M&M.

In an interview to The Tribune, Choudhari said the new amalgamated company will retain the brand Swaraj, as it was a valuable brand with strong presence in Punjab, Haryana, Uttar Pradesh and Bihar.

“We will be using the additional capacity of the PTL plant here for manufacturing Mahindra tractors. Though the plant here has a capacity to manufacture 60,000 units, only 28,000 units of Swaraj tractors were manufactured last year. The production will be ramped up to produce M&M tractors,” he said.

He said the interest of the vendors of PTL would be kept in mind, and they, along with the vendors of M&M will jointly supply the goods and components to the company’s facility at Mohali.

“With the amalgamation, we will get economies of scale as we will benefit in terms of IT processes, production and gods transfer,” he said.

After the amalgamation has been approved by the Board of Directors today, it has to be approved by the shareholders and also by a court of law.

The entire process will take at least eight months before the merger is completed. It may be noted that M&M had acquired a 63.5 per cent stake in PTL last year.

The two main financial investors in PTL — Actis and the investment arm of Dabur India — had decided to sell off their stake in the company in February 2007.

While Actis had sold off its 29 per cent stake, the investment arm of Dabur India sold its 14.5 per cent shares. Later, M&M had picked up 20 per cent of the company’s share from the open market.

New Delhi, July 30
A day after RBI raised short-term lending rate and mandatory amount to be parked with it, leading public sector lender Punjab National Bank today decided to increase prime lending rates (PLR) by one per cent.

"The board has decided to increase PLR by 100 basis points and deposit rates in between 75-100 basis points following the tight monetary stance of the Reserve Bank," PNB chairman and managing director K.C. Chakrabarty said. The new rates would be effective from August 1.

PNB is the first bank to announce a hike in both deposit and lending rates after RBI increased short-term lending rate (repo rate) by 50 basis points and mandatory deposit ratio (CRR) by 25 basis points yesterday. The banks PLR stands at 13 per cent as of now.

Meanwhile, the bank posted a net profit of Rs 512.40 crore for the quarter ended June 30, 2008, a 20.54 per cent increase from the corresponding period a year-ago.

The lender posted a net profit of Rs 425.07 crore for the quarter ended June 30, 2007, PNB said in a release.

Total income increased to Rs 4,594.62 crore for the quarter ended June 30, from Rs 3,795.12 crore a year ago. — PTI

Bangalore, July 30
Infosys boss Nandan M Nilekani was pulled up right here today in his very own city Bangalore by Rajiv Narang, an entrepreneur, whose mantra is “show positive irreverence to giants”.

The occasion was launching of an “innovation manifesto” for which Narang’s Erehwon Innovation Consulting had collaborated with two other companies, namely Marico Industries and Altair Engineering Products India Pvt. Ltd.

Nilekani, according to Narang, was quoted in the New York Times as saying Indian IT companies would always work as backroom operators for US software companies.

Narang cited Nilekani’s comment as an illustration of a mindset that hinders the growth of innovation by Indian companies.

Narang calls Nilekani by his first name but he was unsparing in his criticism of the latter’s “mindset”.

“The comment probably stemmed from kind of business activity that Nandan’s company is engaged in”, he said.

The manifesto, released here today by Narang and his co-collaborators after doing research in the field for two years, identified deference to giants, deference to the developed world, gatekeeper mindset etc, as major hindrances for innovations by Indian companies.

Narang said while innovations were tried by Indian companies for improving business process and marketing, product innovation is an area which is almost inevitably ignored by Indian companies.

“Even the R&D facilities set up by multinational companies in India shy away from innovation and play second fiddle to their counterparts in western countries,” Narang said.

He cited the slim watch developed by Titan, Ace mini truck and Nano car developed by the Tatas, as instances of successful innovations by Indian companies.

New Delhi, July 30
The decision of the government to allow four private companies to manage the Employees’ Provident Fund (EPF) has left the political parties and economists divided on the issue.

On the one hand, there are concerns that lack of experience and expertise could lead to a gross mismanagement of such huge sums of money, on the other hand, there are arguments that there are benefits of high returns to the struggling EPF, which has been always giving much lower returns than expected.

The obvious objections came from the Left parties who made a scathing attack on inclusion of Anil Ambani -led Reliance Capital as managers of EPF.

The Left parties’ objection was more to do with the sour feelings against Anil Ambani, who, it is said, has supported Samajwadi Party in supporting the government for the nuclear deal.

The party's Politburo demanded that the government should refrain from implementing this anti-worker decision.

The objection is that nearly Rs 2,40,000 crore in the corpus fund and another Rs 30,000 crore of the annual incremental fund, will be literally gifted to the corporates.

In addition, the CPM stated that handing huge amount of workers' provident fund to finance companies would be used for speculative purposes in the stock exchanges.

Certain section of economists, however, take a positive view of this move and say that EPF, which was struggling to give a return of 8 per cent for the past many years, will now be professionally managed and chances are that there will be a double-digit return.

However, the stock market speculation has left many people uneasy in the past few months, especially investments in mutual funds, as the returns on these funds have turned negative of late.

Economists defend the stock market investment saying a part of the EPF is always invested in either debt or equity markets and that is how the returns are yielded.

This was the way State Bank of India has been managing all these years. However, the catch is on stock markets’ performance.

But, there is another danger of over speculation, as was witnessed in Unit Trust of India in the 1990s which went bust because of surreptitious activities carried out by stock broker Harshad Mehta.

A section of economists do caution that such a move could trigger over speculation and lead to a UTI kind of situation.

However, the world over Provident Funds are invested in stock markets and the results are decent.

But the question is are the Indian stock markets mature enough to take the flow of such huge capital, and whether the Indian worker is accustomed to facing the uncertainties that stock markets bring.

Four asset management companies (AMCs) were selected by the Central Board of trustees (CBT) of the EPF to manage fresh additions to the EPF corpus.

HSBC AMC, ICICI Prudential AMC, SBI AMC and Reliance Capital AMC will handle incremental flows to the EPF corpus, reckoned to be close to Rs 300 billion annually from September 1, 2008.

New Delhi, July 30
As the government is expected to come out with a policy on third generation (3G) telephony, there are indications that a major standoff may occur between the GSM and the CDMA operators with both seeking to get the best from the new allocation.

While reports suggest that the government may announce the much-delayed 3G and Wi Max policy on Friday, GSM and CDMA players have been slugging it out in courts over dual spectrum allocation to Reliance Communications and Tata Teleservices.

The GSM players yesterday asked telecom tribunal TDSAT for an early final hearing on the allocation of dual spectrum to CDMA operators, and said any further delay would cost them ‘dearly’.

They also suggested that the double allocation would sound a death knell for the
GSM operators.

Last year, the Cellular Operators Association of India (COAI), had challenged the DoT’s move to allow telcos to offer services using dual technology — offer both GSM and CDMA-based services on the same platform.

On the other hand, CDMA operators, especially Tata Teleservices, has been pressing that spectrum allotment for both GSM and CDMA should be treated at par in the ratio of 1:1.

As per the existing spectrum policy, operators on the GSM technology are given twice the amount of spectrum compared to CDMA players as the latter is a more spectrum-efficient technology.

The DoT guidelines entitle GSM operators to a maximum of 15 MHz per circle, while for CDMA operators, it is 7.5 MHz per circle.

The reports also suggest that CDMA operators could well be up in arms as the upcoming 3G policy may not give the CDMA operators much room to roll out the services as the frequencies in which they could offer the 3G services may not be auctioned at all.

But reports suggest that the already existing CDMA players would be hit hard now in the upcoming auction as the DoT has issued new licenses for newer CDMA operators in the 800 MHz frequencies to offer 2G services.

Thus implying that spectrum in the 800 MHz would unlikely to be available during the upcoming 3G auction.

The CDMA operators are thus quite peeved at these developments and feel that the new 3G policy would discriminate against them because they do not have network equipment in 2.1 GHz and handsets which will work with the present 800 Mhz (where they currently offer 2G services).

New Delhi, July 30
Development plans of the new domestic terminal and upgradation of existing international terminal at the Chennai airport has received the Public Investment Board (PIB) clearance.

After the project gets the CCEA approval, the construction and development work is expected to begin in September and completed by October 2010.

The total cost of the project is Rs 1,808.10 crore, of which approximately Rs 1,077.16 crore is for the new domestic terminal building and modernisation and extension of the international terminal and facelift of existing international and domestic terminals.

While 80 per cent of the project will be funded through internal resources of the AAI, 20 per cent will be through commercial borrowings.

No User Development Fee or budgetary support has been envisaged for the project, say officials.

The decision for developing Chennai Airport to international standards was taken in April 2007.

The AAI developed a master plan and design of terminals through Global Architectural Design Competition following which an Inter-Ministerial Group (IMG) approved them.

The plans focus on the enhancement of runway capacity, apron capacity and terminal building capacity.

The state government has already handed over about 130 acres of land to the AAI for the development of the second runway.

In a meeting chaired by the defence minister on July 24, it was decided to hand over 21 acres of Defence land to the AAI for the expansion of the airport.

The Expert Committee on Infrastructural development, too, is expected to give environmental clearance of the project soon.

New Delhi, July 30
Reliance Petroleum Ltd (RPL) is likely to begin production of Euro-III grade fuel from its under-contruction refinery at Jamnagar by September-end or early October, even as the company is scouting for oil storage facilities globally to market products.

Trial runs at the 580,000 barrels per day (29 million tons a year) refinery will begin in August, a senior company official said.

The refinery is likely to start producing Euro-III grade petrol and diesel by September end or early October and Euro-IV grade fuel by end of the year.

Pre-commissioning activities are proceeding at a hectic pace with necessary support infrastructure facilities already under commissioning, he said, adding that the company will buy extra crude oil from Saudi Arabia in August to fill up tanks.

Reliance Petroleum, a unit of India's largest private firm Reliance Industries, had originally targeted December for the completion of the project.

Chevron Corp of US has 5 per cent stake in RPL and has time till March 2009 to raise it to 29 per cent.

The official said the company is looking at acquisition of oil storages in Singapore, Mediterranean, Europe, US and Gulf to stock clean fuel from the export-oriented refinery closer to their market.

The storages are to serve as intermediate points to tap consumption centres particularly in Europe and US, its main market for the premium fuels.

Industry sources said it has already bought some petroleum storage tanks in the Caribbean and was looking at some others in Panama. — PTI

New Delhi, July 30
Faced with mounting losses, Indian Oil Corp (IOC), the nation's largest fuel retailer, has 'temporarily' stopped giving new domestic cooking gas (LPG) connections, a move that has led a wait list of over 2 lakh.

"We have not bought new cylinders for almost one year now due to cash crunch (and so) we do not have equipment to give new connections," IOC chairman Sarthak Behuria told reporters here.

IOC loses Rs 338.53 on sale of every 14.2 kg LPG cylinder and its daily loss on sale of the domestic fuel is about Rs 33 crore.

"We do not have working capital to service new consumers. So temporarily we have stopped issuing new connections," Behuria said.

"Consumers are welcome to enrol but we have not given new connections since April." Behuria said the move has led to a wait list of over two lakh consumers. "These are difficult times. We are faced with huge working capital shortage."

IOC, which has 56 per cent of the over 9.8 crore LPG consumers in the country, is projected to lose Rs 1,21,015 crore on sale of petrol, diesel, domestic LPG and kerosene in the current fiscal. — PTI

Mumbai, July 30
Homegrown auto major Tata Motors' April-June quarter net profit fell 30 per cent to Rs 326.11 crore.

BRIEFLY

Rupee gains 30 paise
Mumbai: The Indian rupee gained 30 paise on Wednesday at 42.35/36 against the greenback to snap its four days of losing spree on a slew of favourble developments. Smart recovery in equity markets, fall in global crude oil prices and overnight central bank's decision to hike repo rate and cash reserve ratio mainly turned the tide in favour of the domestic currency. — PTI

Lupin acquires German firm
Mumbai: Pharma major Lupin on Wednesday said it has acquired Germany-based sales and marketing firm Hormosan Pharma for an undisclosed amount. "This is in line with our M&A strategy to harness the potential of the leading global pharma markets. This is our first acquisition in the important European market," Lupin chairman Deshbandhu Gupta said. — PTI

BSNL scheme for rural areas
Kota: In a bid to tap the rural market, state-run Bharat Sanchar Nigam Ltd on Wednesday said it would provide rent-free basic telephones to customers in villages. This scheme would commence from August 1 and would be made applicable only for those rural telephone exchanges that have the capacity of 1,000 phone lines, BSNL general manager Hari Shankar Sharma said here. For STD facility, the consumer would have to deposit Rs 500 as security money, which would be refunded when the consumer disconnects from the facility. — PTI

Birla Corp to invest Rs 1,200 cr
Kolkata: M P Birla Group's flagship company Birla Corporation, now controlled by R S Lodha, on Wednesday announced its plan to set up a 3-million tonne cement plant in Madhya Pradesh at an investment of Rs 1,200 crore. The new plant would augment the company's total cement capacity to over 10 MT by 2011. — PTI

Reliance Capital
Mumbai: Anil Ambani group firm Reliance Capital on Wednesday announced a consolidated net profit of Rs 343.07 crore in the first quarter ended June 30, a five per cent growth over the corresponding period a year-ago. The total income rose 31.32 per cent to Rs 1,544.56 crore in the quarter under review, from Rs 1,176.20 crore in the year-ago period. During the quarter the company's total assets increased 124 per cent to Rs 19,940 crore. The earnings per share rose 7 per cent to Rs 13.97, the filing said. — PTI

Aviva plans foray into MFs
New Delhi: Private sector life insurer Aviva India on Wednesday said it was exploring possibility of entering into asset management business. "As part of our expansion strategy in Asia Pacific and keeping in mind the opportunity India presents, we would like to enter into asset management business as soon as possible," Aviva India managing director Bert Paterson said. — PTI